DeFi projects often allow community members to govern the future of the project. For YFI, the asset of Yearn.Finance, a crucial vote is coming up. The proposal to increase the YFI supply by 1,000 doesn’t seem to go over well with the community.
Yearn.Finance Faces a Crossroads
Some people may argue that YFI is one of the most overvalued DeFi assets on the market. Priced at over $32,000, one has to wonder how sustainable this price trend is. One aspect working in favor of the token is how it is incredibly scarce. Its maximum supply is capped at 30,000, yet its market cap to TVL ratio remains at 2.68, not necessarily ideal.
The limited supply of YFI is now under threat. A proposal exists to increase the supply by an extra 1,000 YFI, or a 3.33% supply growth. An odd decision, even though the reasoning behind this proposal makes some sense. The objective is to put the additional supply in a multi-sig wallet controlled by the core developer team.
One reason for doing so is to reward the selfless launch of Yearn.Finance by Andre Cronje. The proposal mentions Andre did not have enough time to mine many YFI solo, even though that reason may not hold water. Developers should not look into these projects to enrich themselves, after all.
While the developers behind popular DeFi projects deserve praise, a monetary reward is not necessary. Significantly if that reward alters the hard supply cap of the project. Introducing an extra $32 million in tokens- while locked in a multisig – will make many people uneasy. In fact, this proposal will undoubtedly turn some people away from Yearn.Finance altogether.
YFI Community isn’t Amused
So far, there is very little interest in backing this project. Although 39% of the voters see merit in this approach – most likely without considering the consequences – there is a clear outspoken “nay” in place. An immutable supply needs to remain immutable. If someone wants to support developers, send them a donation, either in YFI or other currency.
One also has to remember the minting keys for Yearn.Finance were burned a while ago. That vote, led by the community, clearly favored this approach to ensure no one can’t alter the supply. Going back on that decision now is a slap in the face of the community. Incentivizing developers can be done without changing a locked supply cap.
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